Would you buy a buy to let at the moment

fertyskids

Me and hubby paid off our mortgage a couple of years ago.

we spend the £900 a month thats was on the mortgage on "nice" things but would rather save it.

we also have about 25k in the bank

we looked at the stock market but were not happy with the advice we were given

we are thinking of buy to let... use 10k cash deposit. £40k mortgage on our home and £150k mortgage on buy to let.. this would give us a 3 bed house with garage in bh21 a good area good schools and very rentable.

i am unsure if the housing market will go down and interest rates will go up.

we see this as a longterm descion 15 - 25 yrs we are happy to have a mortgage on our own property as we will be "saving" this money each month. if interest rates went up we could cope on the £40k mortgage on our home but not sure how it would affect the mortgage on the buy to let... although we would still have at the moment £150k ecuity in our house.

would you do it? thoughts please...

sorry i also manage a buy to let (no mortgage but in trust for my son so financially seperate) so im ok with tenants and property maintenance etc its the mortgage side that will be new to me.

HAMISH_MCTAVISH

fertyskids wrote: »

i am unsure if the housing market will go down and interest rates will go up.

Housing bears think prices are too high, rates will rise, prices will fall.

Housing bulls think the shortage of housing is insurmountable, and note that rents are rising, rental supply shortage is at record levels, housebuilding is at the lowest level since 1924, population is increasing by 400,000 a year, base rates are likely to stay below 3% for a decade, and the next demographic surge of population at FTB age starts in 2013.

Read the last 30 threads started by me for why prices will rise, and the last 30 threads started by carolt or macaque for why prices will fall.

Then make your mind up.

Wookster

Don't listen to Hamish.

If you are serious about a BTL, look at each property individually, work out what your outgoings & incomings are, estimate maintenance costs, account for some time when the flat is empty then look carefully at your net income and decide. Do this for each property you are looking at.

A rise in house prices would be a bonus, but don't count of it.

Blacklight

Show me any point in the past where prices were higher fifteen years earlier.

Generali

fertyskids wrote: »

Me and hubby paid off our mortgage a couple of years ago.

we spend the £900 a month thats was on the mortgage on "nice" things but would rather save it.

we also have about 25k in the bank

we looked at the stock market but were not happy with the advice we were given

we are thinking of buy to let... use 10k cash deposit. £40k mortgage on our home and £150k mortgage on buy to let.. this would give us a 3 bed house with garage in bh21 a good area good schools and very rentable.

i am unsure if the housing market will go down and interest rates will go up.

we see this as a longterm descion 15 - 25 yrs we are happy to have a mortgage on our own property as we will be "saving" this money each month. if interest rates went up we could cope on the £40k mortgage on our home but not sure how it would affect the mortgage on the buy to let... although we would still have at the moment £150k ecuity in our house.

would you do it? thoughts please...

sorry i also manage a buy to let (no mortgage but in trust for my son so financially seperate) so im ok with tenants and property maintenance etc its the mortgage side that will be new to me.

Personally I wouldn't touch it with a bargepole. It's too much effort and too risky as you put all your eggs in one house/flat. As a business it may or may not be good depending on how the numbers stack up, as an investment it's lousy.

Look at ETFs (exchange traded funds). They are a very low cost way of buying a lot of different assets, they're very liquid for the most part and they are an easy way to get a lot of diversification. PM me if you'd like some info.

To make it clear, I have no financial interest in the sale or purchase of any ETFs and AFAIK my employer nor anyone else that I have a financial interest in neither writes nor sells ETFs.

Blacklight

Chaos_A.D. wrote: »

I just think it's a vile business.

People will always need rented properties. What would the STR brigade have done with out landlords? Are students supposed to buy?

Vile business is no win, no fee groups who encourage people to pursue employers thorough the legal system for the chance of making a few quid on a spurious insurance claim.

brit1234

It could be a good investment but the timming is very bad. House prices are at a high but have started falling again. Most of us here think prices will crash at this point so you could get massive negative equity.

Then you have to take into chance the effects of falling rents with the government caps as well as the genral downturn continuing risk greater threat of void periods.

Not a good time at all.

FTBFun

How is being a landlord "a vile business?"

I'm not one before you ask, and rent myself (not for much longer mind). People do need to live somewhere, and not all can afford to buy or want to buy.

Graham_Devon

Blacklight wrote: »

Show me any point in the past where prices were higher fifteen years earlier.

It's not just the asset price.

It's the interest rates on your loan. It's the running of it. The insuring it. The months when it's empty and you have no tennants. The repairing it.

Nevermind the possible stress of it all.

It's what Hamish seemed to miss in his quest to show prices are rising too. It's a very personal decision, and you need a more impartial body to really help somoene understand all the risks and rewards.

StevieJ

Generali wrote: »

Personally I wouldn't touch it with a bargepole. It's too much effort and too risky as you put all your eggs in one house/flat. As a business it may or may not be good depending on how the numbers stack up, as an investment it's lousy.

Look at ETFs (exchange traded funds). They are a very low cost way of buying a lot of different assets, they're very liquid for the most part and they are an easy way to get a lot of diversification. PM me if you'd like some info.

To make it clear, I have no financial interest in the sale or purchase of any ETFs and AFAIK my employer nor anyone else that I have a financial interest in neither writes nor sells ETFs.

ETF'S are great as part of diversified portfolio, then again so is property, I agree with you though I wouldn't fancy fixing the drains and collecting the rent

Blacklight

Chaos_A.D. wrote: »

Oh yeh, I forgot, landlords are in it help out impoverished students, (not). And as for STR's, if there was no BTL, the huge housing bubble would likely have not occurred as it was this business along with lending money if you had a pulse that inflated the price of houses into the stratsophere.

BTL has propped up the market for many years, replacing FTB'rs as they bid up properties with MEW. BTL is not soley responsible for the housing bubble, but it was a significant part, and so IMO wrong.

Just to edit.... regardless of my moral standpoint, Generali summed it up perfectly, if you wanted to go into this 'gutter' business, doing it now would be very risky indeed.

Buy-to-let mortgage lending and the impact on UK house prices:
a technical report Ricky Taylor National Housing and Planning Advice Unit

'BTL mortgage lending would appear to have increased house prices since its introduction in 1996 Q3 but it is important to note that the impact is small in relation to the effect of household growth, the size of the housing stock, mortgage interest rates, and changes in disposable income. However, it has nevertheless had some impact on prices and therefore affordability. For instance, by 2007 Q2 BTL investment was estimated to have increased prices by up to 7 per cent, which was the equivalent of £13,000 on the average house price in that period. This may have been enough to price out some potential buyers from the housing market. On the upside, it is important to acknowledge that there are significant economic and social benefits being delivered by the sector.'

Don't mind the facts, carry on following the sheeple.